ARIANA RESOURCES drilling at its Red Rabbit project in Turkey.

ARIANA RESOURCES drilling at its Red Rabbit project in Turkey.

Ariana Gears Up for High Grade Gold Production at Red Rabbit

Issue 61, October 2013

Ariana Resources faces a bumper few months of news flow, with permitting and financing for its Red Rabbit gold project in Turkey both entering their final stages.

The company is in final discussions on lending terms for the project, says founder Kerim Sener, with construction scheduled for early next year. At grades of over 3 grams per tonne, Red Rabbit is due to produce 21,000 gold ounces per annum in its first five years, rising to 50,000 ounces on ore from its Tavsan license area.

The mine will pour cash flow into expanding Ariana’s resource base on the bonanza-grade Sindirgi gold corridor, in turn pouring further ounces through Red Rabbit’s processing plant.

To minimise construction risk, Ariana has vended the project into a joint venture with Ankara-based construction group, Proccea Construction, which has spent $2m to date earning 18 per cent. A further $6m is due, lifting Proccea’s share to 50 per cent and funding development costs, alongside a $25m loan expected from Turkish lenders.

According to research house Loeb Aron, the structure bridges a gap between Turkey’s cash rich engineering groups and lack of exploration capital. For Ariana, the agreement lessens equity dilution, broadens its project reach and holds the company’s focus to greenfield exploration. It also has a joint venture with Eldorado Gold, which has spent $6m on their licenses to date, aiming for a 2m ounce deposit, plus a strategic investment in Sprott-backed Tigris Resources.

A ministerial decision on permitting for Red Rabbit is due in November. “The Government has tended to open doors more often than it has closed them,” Sener observes. Having been lectured as a geology graduate by London-listed Stratex boss, Bob Foster, Sener listed Ariana in his 20s in 2005. As a Turkish national partnered with Turkish contractors, he says he has a discernible advantage in the country over a company flying in from Adelaide or Vancouver.

Ariana also enjoys the technical oversight of Newmont Mining’s former head of exploration in the country and has licensed the major’s Turkish target database. “There are targets right, left and centre,” Sener says, “but we specifically want to focus on growing the resource around Red Rabbit.”

“The Government has tended to open doors more often than it has closed them.”

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